When will the Iron Ore bubble burst? - Aussie Stock Forums

View Poll Results: When will the Iron Ore bubble burst?

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  • 2010

    3 12.50%
  • 2011

    1 4.17%
  • 2012

    1 4.17%
  • 2013

    4 16.67%
  • 2014+

    15 62.50%
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  1. #1
    Make the drill work for YOU springhill's Avatar
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    Jun 2007
    Mental Institution

    Default When will the Iron Ore bubble burst?

    Hey Guys was just thinking today bout the number of Iron Ore producers, explorers and wannabes. Things are looking great on the Aussie scene for the time being while Rio, BHP and now FMG have the lions share of IO exported. But with so many mid-caps endevouring to come onstream in the next 3-4 years who the hell is going to use all the IO we are digging out? And at what point do we hit saturation levels and its no longer worth a pinch of sh!t? I will leave out 2009, obviously it wont be then

    On another note where could i find a list of all the companies with IO interests?
    "You have enemies? Good. That means that you've stood up for something, sometime in your life" - Winston Churchill

  2. #2
    hoarding tinned food kennas's Avatar
    Join Date
    Apr 2006
    By the river
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    Default Re: When Will Iron Ore Bubble Burst?

    There is an Iron Ore thread somewhere discussing IO companies.

    Try a search...

  3. #3

    Default Re: When Will Iron Ore Bubble Burst?

    Well steel is becoming as rare as hen's teeth.

    Just to give an idea of the increase in the price of steel in Australia, have a look at the increase in prices this year .....

    go to July2008 Update, you'll find this chart:-

    Four increases for Structural (hot rolled) steel ...

    18 Feb 18.5%
    1 Apr 6%
    12 May 13%
    16 Jun 17%

    try compounding that, and you'll see it's going up like a homesick angel.

    Word is there will be another 15% or so at end of this month

    PS No doubt Turnbull will blame Wayne Swan , lol
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  4. #4
    skc's Avatar
    Join Date
    Aug 2008
    The dark side
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    Default Re: When Will Iron Ore Bubble Burst?

    Has the iron ore bubble burst?

    This from the AFR today...

    Iron ore past its ‘golden age’: Barnett

    West Australian Premier Colin Barnett says the rapid growth in the iron ore industry that helped support the economy is ending and Australia’s chief commodities forecaster says a big destination for the ore, China’s steel-making, will decline.

    Why's Gina Reinhart still building Roy Hill?

    It's a $9.5B project with $7B in debt. I don't know the detailed economics of the project, but it's supposed to produce 55 mtpa. Well AGO currently produces ~8 mtpa and only has an enterprise value of ~$550m. That's <$70/mtpa, while Roy Hill is going to cost ~$170/mtpa. AGO also have potential expansion opportunities to go up to 45 mtpa. It's producing now so it can sell iron ore at current prices (rather than some unknown price in 2015), and it has far less project development risks. So unless Roy Hill has much longer mine life and higher grade ore, how can it justify the project capital costs?

    If Roy Hill doesn't go ahead (either by choice or by the fact that debt finance cannot be arranged), it would symbolically mark the end of the iron ore boom.

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